U.S. Stocks May Lack Direction Ahead Of Fed Announcement

Following the strong upward move seen last week, stocks may show a lack of direction in early trading on Monday. The major index futures are currently pointing to a roughly flat open for the markets, with the S&P 500 futures down by just 0.1 percent.

Traders may be reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is almost universally expected to lower interest rates, but there remains some debate about the size of the rate cut.

CME Group’s FedWatch Tool is currently indicating a 65.0 percent chance of a half point rate cut and a 35.0 percent chance of a quarter point rate cut.

Whether the Fed decides to cut rates by 25 or 50 basis points, the central bank is still expected to continue lowering rates over the remainder of the year.

In U.S. economic news, the Federal Reserve Bank of New York released a report showing regional manufacturing grew for the first time in nearly a year in the month of September.

The New York Fed said its general business conditions index surged to a positive 11.5 in September from a negative 4.7 in August, with a positive reading indicating growth. Economists had expected the index to inch up to a negative 3.9.

The report also said firms grew more optimistic that conditions would improve in the months ahead, as the index for future business activity climbed to 30.6 in September from 22.9 in August.

Stocks moved mostly higher during trading on Friday, extending the upward trend seen over the past several sessions. The Nasdaq and the S&P 500 closed higher for the fifth straight day, largely offsetting the steep losses posted last week.

The major averages all finished the day firmly in positive territory. The Dow advanced 297.01 points or 0.7 percent to 41,393.78, the Nasdaq climbed 114.30 points or 0.7 percent to 17,683.98 and the S&P 500 rose 30.26 points or 0.5 percent to 5,626.02.

For the week, the tech-heavy Nasdaq soared by 6.0 percent, the S&P 500 shot up by 4.0 percent and the Dow surged by 2.6 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Monday, with several major markets closed for holidays. Hong Kong’s Hang Seng Index and Australia’s S&P/ASX 200 Index both rose by 0.3 percent.

Meanwhile, the major European markets are seeing modest weakness on the day. While the German DAX Index is down by 0.3 percent, the French CAC 40 Index is down by 0.1 percent and the U.K.’s FTSE 100 Index is nearly unchanged.

In commodities trading, crude oil futures are climbing $0.53 to $69.18 a barrel after slipping $0.32 to $68.65 a barrel last Friday. Meanwhile, after surging $30.10 to $2,610.70 an ounce in the previous session, gold futures are edging down $2.30 to $2,608.40 an ounce.

On the currency front, the U.S. dollar is trading at 140.27 yen versus the 140.85 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1120 compared to last Friday’s $1.1075.

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